7 Mile Advisors
Sectorwatch: LATAM - IT Services June 2021
Sector Watch:Latin America - IT Services
7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only inconjunction with a verbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document.All data cited in this document was believed to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor7M Securities make warranties or representations as to the accuracy or completeness of third-party data contained herein. This document should be treatedas confidential and for the use of the intended recipient only. Please notify 7 Mile Advisors if it was distributed in error.
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Sector Dashboard
Public Basket Overview
Public Basket Performance
Operational Metrics
Valuation Comparison
Recent Deals
Appendix
2
Overview
7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally.
DASHBOARD
PUBLIC BASKET PERFORMANCE
VALUATION COMPARISON
RECENT DEALS
• Summary metrics on the sector.• Commentary on market momentum by comparing the
most recent 12-month performance against the last 3-year averages.
• Summary valuation and operating metrics for a basket of comparable public companies.
• Graphical, detailed comparison of valuation multiples for the public basket.
• The most recently announced deals in the sectors.
We advise on M&A and private capital transactions and provide market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets.
We publish our sectorwatch, a review of M&A and operational trends in the industries we focus.
1 - year revenue growth compared to revenue growth average for last 3 years - Current revenue growth rate exceeds the average of the last 3 years by this amount, indicating that market momentum is increasing
3.2%
6.0x
22.6x
38.5x
54.5x
0x 5x 10x 15x 20x 25x 30x 35x 40x 45x 50x 55x 60x
Median TEV / LTM Revenue
Median TEV / LTM EBITDA
Median TEV / LTM EBIT
Median Price / LTM Earnings
12.3%
16.7%
35.6%
0% 10% 20% 30% 40%
Median LTM Rev. Growth %
Median LTM EBITDA Margin %
Median LTM GP Margin %
Dashboard
4
Operating Metrics
Valuation
REVENUE GROWTH MOMENTUM
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2011 2013 2015 2017 2019 2021*
M&A Activity
Deal Count*Deal count for 2021 is as of June 28th and is not a full-year statistic.
Sonda 693 121 994 -11.4% 17.4% 12.1% 0.7x 5.7x 13,387 74
Indra Sistemas 2,220 302 3,565 -4.5% 37.6% 8.5% 0.6x 7.4x 48,979 73
Totvs 4,198 502 17.0% 70.5% 8.4x 10,000 50
Endava 6,886 98 526 19.6% 33.6% 18.6% 13.1x 70.2x 7,139 74
Globant 9,331 203 893 26.7% 37.6% 22.7% 10.5x 46.0x 17,267 52
Accenture 180,358 8,007 47,949 7.6% 32.0% 16.7% 3.8x 22.5x 569,000 84
Company TEV $mLTM
EBITDA $mLTM Rev
$m
Rev Growth
YoYGP % EBITDA % TEV / Rev X
TEV / EBITDA X
# FTEsRev / FTE
$k
Public Basket
5
Average 33,948 1,746 9,071 9.2% 38.1% 15.7% 6.2x 30.4x 110,962 68
Median 5,542 203 943 12.3% 35.6% 16.7% 6.1x 22.5x 15,327 73
share price as of 28Jun21
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TEV/EBITDA (Adjusted) - Median
TEV/EBITDA (Adjusted) - Average17.3x
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TEV/EBITDA (Adjusted) - Median TEV/Revenue - Median
TEV/EBITDA (Adjusted) - Average TEV/Revenue - Average
Public BasketPublic EBITDA Multiples over Time
Public Revenue Multiples over Time
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- 5% 10% 15% 20% 25%
Median
Indra Sistemas
Sonda
Accenture
Endava
Globant
- 20% 40% 60% 80%
Median
Sonda
Accenture
Endava
Globant
Indra Sistemas
Totvs
Operational Metrics
LTM Gross Profit Margin % LTM EBITDA %
7*Totvs EBITDA data is not available.
Operational Metrics
LTM Revenue Growth %LTM Revenue per
Full Time Employee x 000’s
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(20%) (10%) - 10% 20% 30%
Median
Sonda
Indra Sistemas
Accenture
Totvs
Endava
Globant
$- $20 $40 $60 $80 $100
Median
Totvs
Globant
Indra Sistemas
Endava
Sonda
Accenture
Operational MetricsAccounts Receivable
TurnoverAverage Days
Sales Outstanding
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0x 2x 4x 6x 8x
Median
Totvs
Endava
Globant
Accenture
Sonda
0 50 100 150
Median
Sonda
Accenture
Globant
Endava
Totvs
*Indra Sistemas AR turnover data is not available. *Indra Sistemas average days sales outstanding data is not available.
Valuation
TEV / LTM Revenue TEV / LTM EBITDA
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0.0x 5.0x 10.0x 15.0x
Median
Indra Sistemas
Sonda
Accenture
Totvs
Globant
Endava
-10x 10x 30x 50x 70x
Median
Sonda
Indra Sistemas
Accenture
Globant
Endava
*Totvs EBITDA data is not available.
Valuation
TEV / LTM EBIT Price / LTM Earnings
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0x 20x 40x 60x 80x 100x
Median
Sonda
Indra Sistemas
Accenture
Totvs
Globant
Endava
0x 20x 40x 60x 80x 100x 120x
Median
Indra Sistemas
Sonda
Accenture
Totvs
Globant
Endava
6x 7x 23x 45x 70x #N/A
(11.4%)
(4.5%)
7.6%
26.7%
19.6%
17.0%
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LTM
RG
R%
EBIT
DA(x
)
EBITDA(x) LTM RGR%
6x 7x 23x 45x 70x #N/A
17.4%
37.6%
32.0%
37.6%
33.6%
70.5%
-5%
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LTM
GP%
EBIT
DA(x
)
EBITDA(x) LTM GP%
Historical Valuation Multiples versus Gross Profit
Historical Valuation Multiples versus Revenue Growth Rate
Valuation
12*Totvs EBITDA data is not available. *Totvs EBITDA data is not available.
Date Target Buyer / InvestorTotal
Transaction Value
Target Revenue
TEV / Revenue
TEV / EBITDA
15-Jun-21 Werise (Brazil) Delta-v Capital - - - -
14-Jun-21 Pixan Apps Zigatta - - - -
02-Jun-21 Redpagos Prosegur Compañia de Seguridad - - - -
31-May-21 Energy Computer Systems Grupo Amper 0.97 - - -
28-May-21 NotCo Union Square Hospitality Group 10.00 - - -
24-May-21 Valor Inmueble Cinven - - - -
12-May-21 OmniLatam 777 Partners 11.30 - - -
09-May-21 Nubila Nybl - - - -
03-May-21Acepta (Chile) HG Capital (UK) - - - -
30-Apr-21 DTI Digital WPP - - - -
14-Apr-21 Adweb Solutions Mexico Zigatta - - - -
07-Apr-21 BoosterAgro Agrosmart - - - -
Recent Market Transactions
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Sector Watch:Latin America - IT Services - April 2021
AppendixPublic BasketContact Information
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Public Basket
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Sonda SA provides information technology solutions and services.
The firm has IT Services, Applications, and Platform segments. The company provides its products and services to banking, education, governance, health, manufacturing, mining, retail, transportation and utility industries. It operates mainly in Argentina, Brazil, Chile, Columbia, Costa Rica, Ecuador, Mexico, Panama, Peru, and Uruguay.
Sonda
Sonda
Public Basket
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0.2x
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
1.8x
Revenue Multiples - Sonda
TEV/Revenue Average
0x
2x
4x
6x
8x
10x
12x
14x
EBITDA Multiples - Sonda
TEV/EBITDA (Adjusted) Average
0x
20x
40x
60x
80x
100x
120x
140x
160x
180x
P/E Multiples - Sonda
P/E (Adjusted) Average
Sonda
Company Name Date Deal Synopsis
M2M Solutions 22-Jan-19 The company was acquired by Sonda (SGO: SONDA) for approximately BRL 13 million on January 22, 2019.
Ativas Data Center 10-Aug-16Cia Energética de Minas Gerais (BSP: CMIG3) was in talks to sell its 49% stake in the company to an undisclosed investor as of August 10, 2016. Subsequently the deal was cancelled.
Public Basket
17
Totvs SA is a Brazil-based provider of information technology solutions to small and medium enterprises in the education, government, healthcare, and retail end markets.
Its primary product offerings are enterprise resource planning applications with modules for management, finance, operations, human resources, and client services. Other solutions include integrated management software, collaboration, and productivity platforms, and consulting services. The firm has operations in Brazil, Argentina, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Uruguay.
Totvs
Totvs
Public Basket
18
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Revenue Multiples - Totvs
TEV/Revenue Average
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10x15x
20x25x30x35x40x45x50x
EBITDA Multiples - Totvs
TEV/EBITDA (Adjusted) Average
0x10x20x30x40x50x60x70x80x90x
100x
P/E Multiples - Totvs
P/E (Adjusted) Average
Totvs
Company Name Date Deal Synopsis
RD Station 10-Mar-21The company was acquired by Totvs (BSP: TOTS3) for BRL 1.8 billion on March 10, 2021. The acquisition will help the company to enhance the acquirer's business-to-business offer with it's SaaS digital marketing solution.
Tail Target (São Paulo) 19-Dec-20The company was acquired by Totvs (BSP: TOTS3) for BRL 32 million on December 19, 2020. The company will receive a contingent payout of BRL 20 million upon the completion of goals to be reached in 2021 and 2022, in addition to other conditions.
Public Basket
19
Indra Sistemas is a Spain-based provider of information technology offerings for finance, insurance, public administration, airports, defense, healthcare, media, telecom, security, energy, and infrastructure end markets.
Its product capabilities include analytics, cloud computing, enterprise resource planning, networks and communications, electoral processes, bus technology, subway technology, and sustainability solutions. The firm generates revenue in Europe, Africa, the Middle East, the Americas, and Asia-Pacific.
Indra Sistemas
Indra Sistemas
Public Basket
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Revenue Multiples - Indra Sistemas
TEV/Revenue Average
Indra Sistemas
Company Name Date Deal Synopsis
SmartPaper 12-Jan-21The company was acquired by Indra Sistemas (XMAD: IDR) for an undisclosed amount on January 12, 2021. The acquisition reinforces the Minsait's presence in the Italian 'Business Process Outsourcing' (BPO) market.
Sistemas Informaticos Abiertos 31-Dec-19 The company was acquired by Indra Sistemas (XMAD: IDR) for EUR 72.896 million on December 31, 2019.
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EBITDA Multiples - Indra Sistemas
TEV/EBITDA (Adjusted) Average
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P/E Multiples - Indra Sistemas
P/E (Adjusted) Average
Public Basket
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Endava PLC provides technology solutions.
It offers various services such as Agile Transformation, through which the company identify, define, and implement the mix of process, technology, and culture. It also provides Digital Evolution and Automation, Test Automation and Engineering, Cloud, Architecture, Software Engineering, and others. The company offers its services to various industries such as Finance, Retail and Consumer Goods, Telecommunication, Media, and Technology, Insurance and Healthcare, and others.
Endava
Endava
Public Basket
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Revenue Multiples - Endava
TEV/Revenue Average
Endava
Company Name Date Deal Synopsis
Levvel 01-Apr-21 The company was acquired by Endava (NYS: DAVA), a subsidiary of Concise, for an undisclosed amount on April 1, 2021.
Five (Croatia) 04-Mar-21The company, a subsidiary of RealNetworks (NAS: RNWK) was acquired b y Endava (NYS: DAVA), a subsidiary of Concise, for an undisclosed amount on March 4, 2021. With this acquisition, Endava increases its capacity in the ideation, design and delivery of intelligent digital experiences and enhances its capabilities in digital product strategy and performance optimization services.
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70xEBITDA Multiples - Endava
TEV/EBITDA (Adjusted) Average
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P/E Multiples - Endava
P/E (Adjusted) Average
Public Basket
23
Globant SA is a software technology developer based in Luxemburg.
It creates platforms which are powered by native digital technology, better known as digital journeys. The digital journey incorporates various software products, mobile apps and sensors that assist its clients in knowing its end user's behavioral pattern. The key aspects of the digital journey are stay relevant, discover and build. The stay relevant helps its clients in staying abreast of the developments in its industry and taking preemptive measures. The discover conceives digital journeys for the users based on consumer behaviors and technologies and the build creates each digital journey leveraging the work of its studios. The company's revenue is primarily generated by its technology services in the United States.
Globant
Globant
Public Basket
24
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Revenue Multiples - Globant
TEV/Revenue Average
Globant
Company Name Date Deal Synopsis
HABITANT (Spain) 12-May-21The company was acquired by Globant (NYS: GLOB) for an undisclosed amount on May 12, 2021. With this acquisition, Globant reinforces its expansion plans in Europe.
Digital House 25-Mar-21The company raised $50 million of venture funding from MercadoLibre, Globant, and Riverwood Capital on March 25, 2021. Kaszek also participated in the round. The funds will be used to evolve the company's digital training platform, in addition to launching a two-year technology training program and expand its alliances with employers and technology companies in Brazil and the rest of Latin America.
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EBITDA Multiples - Globant
TEV/EBITDA (Adjusted) Average
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P/E (Adjusted) Average
Public Basket
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Accenture is a leading global IT-services firm that provides consulting, strategy, and technology and operational services.
These services run the gamut from aiding enterprises with digital transformation to procurement services to software system integration. The company provides its IT offerings to a variety of sectors, including communications, media and technology, financial services, health and public services, consumer products, and resources. Accenture employs just under 500,000 people throughout 200 cities in 51 countries.
Accenture
Accenture
Public Basket
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Revenue Multiples - Accenture
TEV/Revenue Average
Accenture
Company Name Date Deal Synopsis
Sentor 29-Jun-21The company was acquired by Accenture (NYS: ACN) for an undisclosed amount on June 29, 2021. The acquisition will further extend Accenture's local resources and capabilities and addressing the growing demand for local cybersecurity and managed security services.
Exton Consulting 18-Jun-21
The company reached a definitive agreement to be acquired by Accenture (NYS: ACN) for an undisclosed amount on June 18, 2021. The acquisition will enhance Accenture's ability to leverage the combination of group of people with the latest technologies such as artificial intelligence, data and cloud, to help clients embrace change, accelerate transformation, unlock value and build new sustainable models that benefit all.
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EBITDA Multiples - Accenture
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P/E Multiples - Accenture
P/E (Adjusted) Average
Leroy Davis, Partner 704.899.5962 [email protected]
Tripp Davis, Partner 704.899.5762 [email protected]
Andy Johnston, Partner 704.899.5961 [email protected]
John Cooper, Managing Director 704.973.3996 [email protected]
Mark Landry, Managing Director 561.972.0609 [email protected]
Horacio Yenaropulos, Managing Director + 54.261.4617300 [email protected]
Tim Frye, Senior Director 704.973.3994 [email protected]
Kristina Sergueeva, Director 704.899.5149 [email protected]
Ben Garber, Vice President 412.626.7898 [email protected]
Garth Martin, Vice President 704.973.3997 [email protected]
Nicholas Prendergast, Vice President 704.973.3995 [email protected]
Ariail Barker, Director, Sales & Marketing 704.981.2908 [email protected]
Ben Bruggeworth, VP, Business Development 704.365.8859 [email protected]
Steve Sypek, VP, Business Development 704.414.8736 [email protected]
Emily Halstenberg, Marketing & Sales Manager 704.409.9912 [email protected]
Alexis Papa, Marketing & Sales Coordinator 704.414.8732 [email protected]
Marty Johnson, Senior Associate 704.973.3999 [email protected]
Sydney Scadden, Senior Associate 704.973.3998 [email protected]
Steve Buffington, Associate 704.960.1828 [email protected]
Ilia Ulianchuk, Senior Analyst 704.414.8743 [email protected]
Nic Anderle, Analyst 704.826.7492 [email protected]
Sawyer Willingham, Analyst 704.285.8171 [email protected]
Robin Siegel, Analyst 704.285.8173 [email protected]
Conor Smith, Analyst 704.855.2134 [email protected]
Kevin Postigo, Analyst 704.912.4903 [email protected]
Tanner Lange, Analyst 704.672.0611 [email protected]
Contact Info
7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A and private capital transactions and provide market assessments and benchmarking.
As a close-knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets. Securities offered through 7M Securities LLC.
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